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Author Topic: Bitcoin high inflation environment - Doesn't need greedy miners  (Read 1007 times)
fastandfurious
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August 17, 2011, 06:03:58 PM
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We are right now in a high inflation environment when we look at one key fact: Miners create 7200 Bitcoins/day or 2 628 000 Bitcoins/year. With the media hype in May and June of 2011 we saw a great power of "I want to get rich quick" miners that thought this is the holy grail. At the same time all the early adopters that are in Bitcoins for the long run thought this is great, at last we are getting the media attention we need and deserve.

What everyone missed was this, because we are in a high inflation environment the more Bitcoins gain in value the more "I want to get rich quick" miners will flood the mining sector of Bitcoin. And the more they will invest in it (mining equipment, electricity etc.), the more that money has to come from the buyers at the exchanges. It is a unfortunate situation that isn't easy to handle. The only way I can see this getting on the right track again, and that we don't see all this heavy fluctuations in price, is something that sounds to me to be common sense. As many as possible of the miners should be in the Bitcoin for the LONG RUN, no "I want to get rich fast" people.

That means, miners shouldn't be able to have highly profitable ROI that makes them invest even more in to it (for the next year or so). That means if there are manipulations going on at the exchanges right now, it should stop. That means that prices must go down so all the SHORT TERM GREEDY people is out of Bitcoin, after that we can start going up again and build up the infrastructure that is needed.
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evoorhees
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August 17, 2011, 06:15:20 PM
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So you're saying the price needs to fall to get rid of "short term greedy people" because if they remain then they may cause prices to fall?

Do you see how, perhaps, this "problem" fixes itself?

Serge
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August 17, 2011, 06:17:15 PM
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Free market is a free market.
fastandfurious
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August 17, 2011, 06:20:02 PM
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So you're saying the price needs to fall to get rid of "short term greedy people" because if they remain then they may cause prices to fall?

Do you see how, perhaps, this "problem" fixes itself?



What I am saying is that miners that are in the Bitcoin Economy today shouldn't be able to make any easy money, they don't add anything good for Bitcoin long term. We need miners that want to build up the infrastructure and believes in Bitcoin in the long term. I had one solution of the problem, and it makes common sense. Maybe you have others? I know that this issue is getting smaller for every day, because inflation is a bit less for every day, but we have at least over a year left of it.
gw4tt
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August 17, 2011, 06:30:29 PM
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Prices will somewhat stabilize if bitcoin ever gets big enough. Right now it's not even close.
Piper67
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August 17, 2011, 06:40:10 PM
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So you're saying the price needs to fall to get rid of "short term greedy people" because if they remain then they may cause prices to fall?

Do you see how, perhaps, this "problem" fixes itself?



What I am saying is that miners that are in the Bitcoin Economy today shouldn't be able to make any easy money, they don't add anything good for Bitcoin long term. We need miners that want to build up the infrastructure and believes in Bitcoin in the long term. I had one solution of the problem, and it makes common sense. Maybe you have others? I know that this issue is getting smaller for every day, because inflation is a bit less for every day, but we have at least over a year left of it.

Fastandfurious, you're still not getting the point. If all the greedy miners went and bought their wares because they're greedy and they want to make easy money, but the difficulty increases and they make fewer coins, then they sell as much as they can to make their money back, bringing down the price per BTC, eventually, they are no longer making money and stop mining, which makes the miners that remain more profitable.

Nothing like built in systems of checks and balances... simple and elegant.
fastandfurious
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August 17, 2011, 06:56:42 PM
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The truth is this. At a high inflation environment, if the price is lets say 5 dollars (instead of 10 dollars), and it goes up from there in small steps (instead of speculators speculating up the price with high fluctuation). The money going in to the Bitcoin Economy will stay there at a much higher grade, because you don't have greedy miners that hit the exchanges as soon they have mined 0.1 BTC and order a withdrawal, because their ROI isn't high so they will stop mining when they can't make any quick money on the holy grail. You can see it as good money/ "long term money" and bad money/"short term money". Right now Bitcoin is attracting Bad money.
SgtSpike
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August 17, 2011, 06:58:38 PM
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The truth is this. At a high inflation environment, if the price is lets say 5 dollars (instead of 10 dollars), and it goes up from there in small steps (instead of speculators speculating up the price with high fluctuation). The money going in to the Bitcoin Economy will stay there at a much higher grade, because you don't have greedy miners that hit the exchanges as soon they have mined 0.1 BTC and order a withdrawal. You can see it ass good money/ "long term money" and bad money/"short term money". Right now Bitcoin is attracting Bad money.
That sounds like more of a problem with speculators than miners.

Either way, they shouldn't (and won't ever) be limited.
Gabi
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August 17, 2011, 07:04:45 PM
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To me it seems he either missed bitcoin mining when difficulty was lower or he has a lot of Nvidia cards  Cheesy
joulesbeef
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August 17, 2011, 07:12:27 PM
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Diff just dropped.. and so far rates remained depressed, so we might have another diff drop.
yeah that might attract more people, but right now, growth has stalled as far as mining is concerned.

ANYMOOOOOOOOOOOOOOOO


the price today has more to do with mybitcoin and bitomat than miners or speculators.. insecurity.. people losing large ammounts of coin, make them want to cash out the rest.. people who haven't lost a ton of coin but saw others lost a ton, makes them want to cash out their holdings.. and a falling market makes the easy to panic people, want to cash out their holdings.

Yeah there is a small point to the fact we dont need miners that sell every coin that they mine, but this has been a problem for ages, it isnt the cause of the price right now.

And I think the price right now, is a good price. $10. I'd like it to be higher for sure.. i got coins I would sell, but $10 is a good place for the markets to rise up around.

mooo for rent
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